Highlights
– Generated Q1 2022 net profit after tax (NPAT) of USD 58 million. Declared a Q1 2022 cash dividend of USD 0.31 per share, equivalent to 75% of NPAT
– Highest available liquidity of USD 651 million and lowest net leverage ratio of 25% since IPO
– Achieved Q1 2022 VLGC freight rate of USD 36,900 per calendar day, or USD 40,400 per available day with 96% commercial utilisation
– Enhanced our dividend policy to target a quarterly pay-out ratio of 75% of NPAT when net leverage ratio is below 30%
– Completed the sale of a stake in BW LPG India to Maas Capital in Q1, and concluded discussions for increased ownership in Q2
– Delivered two vessels to new owners in Q1 2022 and signed a Memorandum of Agreement to sell one vessel in Q2 2022. These sales are expected to generate a total liquidity of approximately USD 95 million
– Completed our LPG dual-fuel propulsion retrofitting program for all 15 vessels ahead of schedule and within budget
Financial Performance
BW LPG Limited (“BW LPG”, the “Company”, OSE ticker code: “BWLPG.OL”) reported a Q1 2022 net profit after tax of USD 58 million, yielding an annualised return on equity of 16% with USD 249 million of free cash flow. EBITDA was USD 93 million for the quarter, representing an EBITDA margin of 72%. Earnings per share was USD 0.41.
Net leverage ratio decreased to a record low of 25% in Q1 2022, from 42% in Q1 2021. This is mainly due to solid cash flows from operations, proceeds from the sale of two VLGCs, and capital injection into our India subsidiary. Available liquidity of USD 651 million at the end of Q1 2022 is the Company’s highest to-date.
In line with our aim to return value to our shareholders, the Board has enhanced the Company’s dividend policy to target a quarterly pay-out ratio of 75% of NPAT when the net leverage ratio is below 30%. Buoyed by strong performance lowering our net leverage ratio to 25% in Q1 2022, the Board has declared a cash dividend of USD 0.31 per share amounting to USD 42 million. This translates to a pay-out ratio of 75% of NPAT for the quarter.
BW LPG initiated a USD 50 million share buy-back program in December 2021. At the end of Q1 2022, 3.8 million shares were purchased, amounting to approximately USD 21 million. This program is another way we are returning value to our shareholders.
Commercial Performance
Q1 2022 VLGC freight rates averaged USD 36,900 per calendar day, or USD 40,400 per available day with 96% commercial utilisation. Time Charter Equivalent income decreased to USD 131 million for Q1 2022, mainly due to lower spot rates and lower fleet utilisation predominantly arising from the retrofitting of the remaining three VLGCs with LPG dual-fuel propulsion technology.
In January 2022, BW LPG completed the sale of a stake in our subsidiary, BW LPG India, to Maas Capital. Reflecting our shared confidence in the India LPG market, and belief in the long-term fundamentals of our business in India, Maas Capital has increased its ownership in the subsidiary in Q2. Following the transaction, BW LPG will own approximately 52% in BW LPG India.
The sale and delivery of BW Niigata (2010-built, Mitsubishi Heavy Industries) and BW Trader (2006-built, Daewoo Shipbuilding & Marine Engineering Co. Ltd.) for further trading were concluded in February and March respectively. These transactions generated approximately USD 70 million in liquidity and a net book gain of USD 14 million. BW LPG has signed a Memorandum of Agreement to sell BW Liberty (2007-built, Daewoo Shipbuilding & Marine Engineering Co. Ltd.) with expected delivery in Q2 2022. The sale is expected to generate USD 25 million in liquidity and a net book gain of USD 4 million.
Technical Performance
BW LPG has successfully concluded its pioneering project to retrofit 15 VLGCs with LPG dual-fuel propulsion technology. This project was an upfront investment of over USD 130 million to decarbonise operations and was completed ahead of schedule and within budget. With over 25,000 hours on LPG propulsion at sea, the technology has reduced carbon emissions by 15-20% and sulphur emissions by over 95%.
Market Outlook
Near term VLGC rates remain strong, supported by strong exports out of the US and the Middle East. However, volatilities remain due to geopolitical developments.
We now hold a more optimistic view of the 2023 VLGC market. Our revised view reflects our belief that heavy newbuilding deliveries will be offset to a greater extent by steady export growth with high oil and gas prices stimulating upstream production; resilient demand as LPG is the most viable and cost-efficient transition fuel to decarbonise and move towards a zero-carbon future; and increasing fleet inefficiencies due to tightening emission controls and Panama Canal transit delays.
Q1 2022 Earnings Presentation and Interim Financial Report
Please see attachments for the Q1 2022 Earnings Presentation and Interim Financial Report.
1. BW LPG Q1 2022 Earnings Presentation
2. BW LPG Q1 2022 Interim Financial Report
BW LPG will host an investor presentation of the financial results at 13:00hrs CET today. The presentation will be made by Anders Onarheim (CEO), Elaine Ong (CFO), Niels Rigault (EVP, Commercial) and Pontus Berg (EVP, Technical and Operations).
The presentation will be held live via Zoom. Please register in advance at the link below:
A recording of the presentation will also be available after the event on the Company’s website at: https://www.bwlpg.com/investors.
For further information, please contact:
Elaine Ong, CPA, CA
Chief Financial Officer
Tel: +65 6705 5506
E-mail: [email protected]
Iver Baatvik
Head of Corporate Development and Investor Relations
Tel: +65 6705 5519
E-mail: [email protected]
About BW LPG
BW LPG is the world’s leading owner and operator of LPG vessels, owning and operating Very Large Gas Carriers (VLGC) with a total carrying capacity of over 3 million CBM. With five decades of operating experience in LPG shipping and experienced seafarers and staff, BW LPG offers a flexible and reliable service to customers. More information about BW LPG can be found at www.bwlpg.com.
BW LPG is associated with BW Group, a leading global maritime company involved in shipping, floating infrastructure, deepwater oil & gas production, and new sustainable technologies. Founded in 1955 by Sir YK Pao, BW controls a fleet of over 490 vessels transporting oil, gas and dry commodities, with its 200 LNG and LPG ships constituting the largest gas fleet in the world. In the renewables space, the group has investments in solar, wind, batteries, biofuels and water treatment.
This information is subject to disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.